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Make Finance Reflect Facts and Serve Men

on Thursday, 01 January 1959. Posted in Social Credit

For new credits, interest-free, by the Bank of Canada, to finance new production

This is from a lecture by Earl Massecar, delivered over the radio from St. John, N.B.:

At the last Congress of the Union of Electors, held at St. Basile, New Brunswick, the following resolution was passed with reference to the Bank of Canada:

"The Social Crediters of the Institute of Political Action and the Union of Electors, gathered in national congress at St. Basile, request each provincial government to press the federal government to take the necessary measures in order that the Bank of Canada finance all new production, private and public, by the issuance of new credits free of interest, thus making it possible to reduce gradually, but with all speed possible, municipal and school property taxes, federal and provincial incomes taxes and all other forms of taxes which prevent Canadians from enjoying fully the immense capacity for production with which this country is endowed."

In other words, the Bank of Canada — the bank of the Canadian people should make new money available in the measure in which it is required by new production. What is more, this money should be made available free of interest. That is, the Canadian people, whether as public bodies or private individuals, should not be penalized by interest rates for adding to the sum total riches of the nation. The Bank of Canada would receive back exactly what it issued — not additional sụms of interest which it is impossible to pay since these sums were never created.

Now, does this sound like a reasonable proposition to you? Or does it seem — as our critics charge — to be lunatic financing, "funny money"? Ridicule is always the last weapon of a desperate enemy. Ours use it profusely. Well, let's examine the idea.

The Purpose of Life in Society

We human beings live together in an organization known as society. When mankind was young, society was primitive in form. As mankind developed, and progressed, society became more complex. But, primitive or complex, the reason for the existence of society is mutual aid. Men formed themselves into society because this was the most natural way for them to lead the fullest kind of a life individually. Men did not group together into society with the intention that this or that particular clique of men should benefit at the expense of the others. No. The function of society is to aid the individual, basically through the family.

To put it more concretely, this association of men was inevitable because one man cannot supply all his own needs. A carpenter is not a doctor. A farmer is not a machinist. A miner is not a metal worker. And the business executive uses only his genius for organization and administration. All are dependent one upon the other if they are to benefit fully from man's capacity to live off the resources of the earth. For that reason, interdependence, men have grouped themselves into communities and nations. And for that reason, and that reason only, society came into existence.

If I appear to be laboring this point somewhat, it is only because it is the simple, basic fact of our natural life, and upon it the entire structure of Social Credit philosophy has been erected.

So we are agreed that society exists to aid the individual. We might then believe that after centuries of living together in this society, after having achieved miracles in scientific progress and reached astounding heights in the field of production, each of society's individuals might be living in at least moderate comfort.

Results are a Frustration — Why?

But what is the true picture? Well, for example, this rich country of Canada is carrying a national debt that in 1956 stood at 19 billion dollars. In 1939 it was only 3½ billion dollars. In the United States in 1956 charitable contributions for the relief of poverty and misery reached a total of nearly 400 million dollars. As for unemployment — well, the people of the Maritimes have had as bitter experience of this as anyone. And what about taxes? The federal government has wrung the people dry of tax money. There's little left for the provincial governments. And even less for the municipalities. The poor municipalities! Theirs is an insoluble problem. They can only finance municipal developments and services by plunging further into debt — a debt which, under the existing financial system, they have little hope of ever paying off.

If every individual in society is not enjoying a decent standard of living, the fault lies with the ever-growing burden of debt inflicted on both industrial and public developments and reflected in increasing prices and increasing taxation. And whence arises this debt? From the functioning of a financial system completely at odds with the realities of our economic system. And why is finance so out of step? Because every cent issued to finance new production comes from the banks in the form of a debt. And it must be repaid along with interest by the members of society.

Money diverted from its function

Money should be nothing more than an instrument for bringing about a conjunction between goods and man's wants. Instead, it has become a commodity, manufactured by the financiers and traded in for their profit. Financiers do not produce one jot or tittle of real goods or services. Yet the measure of their profit is the debt of the people, as individuals and as a nation.

This appropriation and misuse of our monetary system by a small clique of ambitious individuals ranks is the greatest crime ever perpetrated upon humanity. From it has stemmed the poverty and misery of the great, masses of the poor — even here in our own fair Dominion. And that multitude of the middle classes who appear to enjoy a modicum of comfort has also been affected by it. For their daily life is a grim and unequal battle to hang on to that comfort. They live without security.

Money should belong to the community, just as real wealth, of which it is the symbol only, belongs to the community. The bankers does not lay claim to the goods and services of the nation. But he does control the money system. And, in our complex society, without money, goods might just as well not exist.

Social Credit demands that the control of money be restored to the rightful authority — the nation. We ask that the bank of the people, the Bank of Canada, be instructed to make money reflect facts, financing new production by new credits. The Bank was instituted to serve the people, Social Crediters ask that it in fact serve the people.

The Beechwood Project, an Example

When the people of New Brunswick wanted to undertake the Beechwood hydro-electric project, its representatives had great difficulty laying hands on the 30 million dollars necessary — for the work — a project to develop a natural treasure belonging to the people of New Brunswick. And when the government did get it from the Bank of Canada, it had to engage itself to repay in 30 years, not only the 30 million but the interest as well. And this interest represerits neither material nor work expended on the project.

So the Bank of Canada, operating under the rules of the existing financial system, penalized the people of New Brunswick — fined them 3 percent of the 30 millions for wanting to develop their own natural resources.

Now is this the characteristic of an institution set up to serve the people? Certainly not. It is more like an institution designed to tyrannize and dominate.

* * *

Our judicial system does not operate to make profits for private individuals. Then why should our monetary system be used for this purpose? It is equally as vital to the welfare of the nation as the courts of law. It should not be used to make profits for those individuals we call financiers.

The Canadians' Bank to Serve Canadians

We request that all credit necessary for new production, public or private, be issued by the people's bank. We ask that this issuance be made without any interest charge. Thus the Bank will serve the people. It becomes an institution for financing new production according to the fluctuation of the consumer's demand. For after all, the consumer is the final judge of what and how much should be produced.

Since there would be no interest charge there would be no debt as we know it today. The same money that was issued would be returned to the Bank. There would be no attempt to make an impossible repayment of interest — which after all is money that has never been created and issued. For it is precisely this endeavor to repay these unpayable sums that has led to the tax burden and high prices we bear today.

Under this new system, small businesses as well as large ones could continue to operate as long as they were able to produce what the consumer wanted. Each part of the country, each province, could go ahead and develop its resources to the benefit of the nation without going into debt. Production would increase by leaps and bounds.

As a result of increased production, and recognizing the fact that production is more and more the fruit of acquired knowledge, which is a common inheritance, a dividend could and should be issued to each citizen. This dividend would make it possible for every citizen to share in the wealth of his country. Poverty, misery and insecurity as we know it today, would disappear.

Does this picture of society appear too rosy to be possible of realization? Well, let us not forget the undeniable fact that society exists to help the individual. And if society can accomplish miracles of production, is there any reason why the individuals should be barred from sharing in this production? Should society's members be poor and insecure because of a finance system that ignores economic reality.

No. Such a society as I have pictured can be ours. But in face of the opposition from the part of the Money Power, the government will not take measures toward its realization as long as the people do not demand it. It is up to each citizen to exert pressure on his representative requesting as a first step that the Bank of Canada be instructed to finance new production with interest-free credits to public and private bodies.


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